A recent in the Wall Street Journal confirms what I pointed out in a recent NCPA study, “

nt” target=”_blank”>Ten Ways to Wreck Your Retirement.” Tapping into retirement accounts is not the best option! Certainly, desperate times can call for desperate measures, but it's important to bear in mind

the true cost: penalties, taxes and the lost opportunity of reaping a market comeback.

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In an article in the Orlando Sentinel, it states: “… Pamela Villarreal, senior analyst for the National Center for Policy Analysis, a free-market think tank in Dallas, noted that taking a $30,000 loan from a 401(k) and paying it back over five years could leave some people with $200,000 less at retirement. Use the 401(k) loan calculator at retirementreform.ncpa.org.”

The article’s author failed to state how such a loss occurs (difference in interest rates, interest rates for a loan from another source, failure to repay, cessation of contributions while repaying the loan, etc.). So, not sure what you told her. But, you should have encouraged her to reread that study a little closer, and to consider a study from almost a decade ago authored by Professor Munnell.

Simply, a loan from a 401(k) need not impact retirement any more than a loan from any other source. And, in today’s collapsed credit market, it may have significantly less impact than other sources of money – such as a hardship withdrawal.

Whether or not they are credit cards or loans, try and pay them as often as you can, rahter than amassing it. To make your retirement a calm one, you are going to need to use caution about any taxes that need to be paid or whether your house is completely yours or not.